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HomeMy WebLinkAboutItem 8.2 Sales Tax Reimb Ring Prop~~~~~ (~~-~ ~1 ~C;'/h /~. CITY CLERK File # Q~^~^-0^ AGENDA STATEMENT CITY COUNCIL MEETING DATE: May 5, 2009 SUBJECT: Sales Tax Reimbursement Program Agreement with Ring Properties Report Prepared by: Linda Maurer, Assistant to the City Manager ATTACHMENTS: RECOMMENDATION: ~~`"~ s ., ,, FINANCIAL STATEMENT: 1. Resolution 09-09 dated January 6, 2009 Adopting a Sales Tax Reimbursement Program 2. Resolution with Proposed Agreement attached as Exhibit A That the City Council adopt the proposed Resolution Approving an Agreement for Reimbursement of Sales and Use Tax Revenue with Ring Properties Relating to Improvements to be performed on a property located at 11501 Dublin Boulevard The proposed agreement would be revenue positive to the City. DESCRIPTION: At the December 2, 2008 City Council Meeting, the City Council discussed the creation of an Economic Incentive program for Fiscal Year 2008-09. During the discussion, Mayor Sbranti outlined a number of ideas including: Fee Deferral Program, Priority Permit Processing, Tenant Improvement (Loans/Grants), Low Interest Loans and Tax Sharing Agreements. At the January 6, 2009 City Council meeting, the City Council approved the Sales Tax Reimbursement Program as the first element of the Economic Incentive Program (see Attachment 1). The current worldwide economic slowdown has impacted the City of Dublin's revenues, and in an attempt to attract new businesses that will provide additional jobs and generate additional tax revenues for the City, the City Council adopted the Sales Tax Reimbursement Program. The Program establishes certain conditions under which the City may agree to enter into an agreement to reimburse property owners and businesses for the costs they incur in making certain interior and exterior building improvements, as well as site improvements provided that certain conditions are met. Staff was approached by commercial property owner Kevin Ring, of Ring Properties, in late 2008 prior to the formal adoption of the Sales Tax Reimbursement Program. Mr. Ring was seeking assistance to attract a new tenant - Graybar Electric, Inc. - to his property at 11501 Dublin Boulevard. Staff informed Mr. Ring of the City's intent to bring forward a Sales Tax Reimbursement Program for approval to the City COPY TO: Page 1 of 3 ~ e ITEM NO. _ G:U.inda Maurer\Sales Tax Reimbursement Program 2009\FINAL Documents\Ring Properties Reimbursement Agreement Staff Report 4-24-09.DOC Q Council. Mr. Ring, upon adoption of the formal Program by the City Council in January, requested to participate. Over the past several months, Staff has worked closely with Kevin Ring in good faith to bring forward an agreement to the City Council for consideration. Agreement Overview The proposed Agreement between the City of Dublin and Ring Properties is to accommodate the improvement needs for a new tenant, Graybar Electric, Inc., a Fortune 500 company that specializes in supply chain management services and the distribution of high-quality components, equipment and materials for the electrical and telecommunications industries. Mr. Ring has entered into a 10-year lease with Graybar Electric, Inc. to occupy approximately 21,000 square feet at 11501 Dublin Boulevard. Graybar will have more than 50 employees working at the new Dublin location. The lease agreement between Mr. Ring and Graybar includes a tenant improvement allowance of $300,000 to Graybar to offset the cost of tenant improvements they will be making in order to occupy the facility. In addition to the tenant improvement allowance, Mr. Ring anticipates the need for other interior, exterior, site and right-of--way improvements to accommodate Graybar as the tenant. These improvements may happen at once, or be separated into two phases, as outlined in the Agreement. Ring Properties has provided a summary of these proposed improvements and related costs as an exhibit to the Sales Tax Reimbursement Agreement. The total cost of these improvements, including the tenant improvement allowance, is estimated at $632,500. This amount will be the maximum contribution by the City allowed under this Agreement and subject to the criteria outlined in the Sales Tax Reimbursement Program. Because a portion of these improvements may involve the use of the City's right-of--way as identified in the exhibit to the Agreement, the City Council would need to authorize those improvements as a separate action at a later date once plans for such improvements have been finalized. Additionally, if the City's right-of--way is used and those improvements are made, Ring Properties agrees, in Section 2.14, that such improvements will be considered "public works" as defined in Section 1720 of the California Labor Code and Ring Properties will ensure that all work in the public right-of--way is performed in compliance with all prevailing wage requirements in Section 1720 of the California Labor Code. The proposed Agreement would provide Ring Properties with fifty (50) percent of the new sales taxes generated by Graybar for a period of five (5) years or, if the improvements are performed in two phases as described above, for a five (5) year period for each phase. However, no payments will be made if Graybar does not generate at least one hundred thousand dollars ($100,000) of new sales tax revenue each of those years. The Agreement, as proposed, meets the criteria established in the Sales Tax Reimbursement Program. First, Graybar does not currently have office space in Dublin. Second, the property owner is proposing to make interior and exterior improvements to an existing Dublin office building. Third, Graybar has furnished documentation establishing the ability to generate at least ten million dollars ($10,000,000) in annual taxable sales transactions from this location, resulting in at least one hundred thousand dollars ($100,000) of new sales tax revenue to the City annually. In addition to meeting the Program criteria, there are other financial benefits to the City. First, the City will be receiving, even after the sales tax reimbursement, a new, ongoing source of sales tax revenue that is likely to persist beyond the time-frame of the proposed agreement. Additionally, the improvements to the property will result in a reassessment of the property's value, increasing the City's property tax revenue. Z~ The California Constitution prohibits the Legislature from making a gift of public funds. However, where public funds are used for a public purpose, such an expenditure is constitutionally permissible, even if a private person benefits. The Sales Tax Reimbursement Program was designed to ensure that the sales tax reimbursement agreements will be for the public benefit, thus ensuring that the reimbursement of tax proceeds does not constitute a gift. In addition to the tax benefits to the City and its residents, this agreement will also result in improvements to the facade of the property, this enhancing the appearance and character of the neighborhood, to the benefit of City residents. Finally, the new business may generate new jobs for City residents, and Graybar employees are likely to spend money at other business establishments in the City, thus generating additional sales tax revenue for the City. RECOMMENDATION: Staff recommends that the City Council adopt the proposed Resolution approving an Agreement for Reimbursement of Sales and Use Tax Revenue with Ring Properties relating to improvements to be performed on a property located at 11501 Dublin Boulevard. ~~ RESOLUTION NO. 9- 09 ~~ ~~} A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING THE SALES TAX REIMBURSEMENT PROGRAM WHEREAS, the current worldwide economic slowdown has impacted the City of Dublin's revenues; and WHEREAS, for decades, state and local government have used Economic development incentives to attract or retain jobs and/or improve a local tax base; and WHEREAS, the Government Finance Officers Association (GFOA) has recommended that any proposed incentive program has specific goals and criteria that serve to define the economic benefit to both the government and the entities receiving the incentives expect to gain from the incentives, the conditions under which the incentives are to be granted, and the actions to be taken should the actual benefits differ from the planned benefits; and WHEREAS, in an attempt to attract new businesses that will provide additional jobs and generate additional tax revenues for the City, Staff is requesting City Council consideration of a program to stimulate reinvestment in the community through a Sales Tax Reimbursement Program; and WHEREAS, the objective of the proposed Sales Tax Reimbursement program would be to: (1) improve the aesthetic nature and physical appearance of existing buildings and promote site improvements to commercial properties in the existing commerciaUoffice/industrial areas of Dublin and (2) tazget existing buildings throughout the community with the goal of improving the existing building stock and also lowering long-term vacancy rates in the community; and WHEREAS, the program would use the concept of reimbursement through sales tax revenues to assist and encourage property owners/tenants to reinvest in, reconstruct, rehabilitate and renovate their properties; and WHEREAS, the proposed program would allow property owners and/or tenants, through a written agreement with the City, to recover over time a portion of the cost of improvements (internal and external) made to the property. The reimbursement would be limited to the actual costs incurred by the owner/tenant for improvements to structures and the property site. Eligible costs would include exterior improvements (painting, facade repair, replacement signage), interior improvements (tenant improvements), and site improvements (parking lots, driveways, landscaping, etc.). Reimbursement for demolition of existing buildings and replacement with new buildings may be considered on a case-by-case basis. Land acquisition costs would be excluded from eligible expenses; and WHEREAS, the program would be made available to businesses that would generate over $100,000 in new sales tax each year (this requires annual taxable sales of $10 million). Businesses would need to certify, by providing copies of sales tax returns to the State Board of Equalization (SBOE) that based on previous operations that this threshold has been met; and WHEREAS, the program would be made available to new, not existing businesses. An exception would be considered on a case-by-case basis for existing Dublin businesses that might relocate/expand within Page 1 oft ~_~_~c1 ~.02 ATTACHMENT 1 z~i ~- the City, if their move /expansion results in additional sales tax revenues that would meet the target ($100,000 or more) established for the program; and WHEREAS, the program would require that all improvements considered under this program must be approved by the City and subject to all laws and regulations; and WHEREAS, the program would calculate and distribute the reimbursement as follows: 1. The amount of eligible improvements will be established and certified with documentation of the expenses. 2. Once retail sales begin to be paid based on reported sales transactions at a location within the City of Dublin, no more than fifty percent (50%) of the net new sales tax would be calculated and considered as the amount of reimbursement subject to the following limitations: a. The cumulative maximum reimbursements paid to the business cannot exceed the total established in number 1 above. b. Reimbursements would be made on an annual basis. c. Reimbursements would continue until the full amount in number 1 above was reimbursed or for a period five (5) years, whichever occurs first. WHERAS, the program would require that all Sales Tax Reimbursement agreements be negotiated by Staff and approved by the City Council. NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Dublin does hereby approve the Sales Tax Reimbursement Program for a period of two (2} years. BE IT FURTHER RESOLVED that the City Council of the City of Dublin will revisit the program at the end of the two-year period and determine if the program should be continued based upon the economic conditions at that time. PASSED, APPROVED AND ADOPTED this 6th day of January, 2009, by the following vote: AYES: Councihnembers Biddle, Hart, Hildenbrand, Scholz, and Mayor Sbranti NOES: None ABSENT: None ABSTAIN: None Mayor ATTE T: G.,- / ` City Clerk Reso No. 9-09, Adopted 1-6-09, Item 7.1 Page 2 of 2 ~~ -~- RESOLUTION NO. -09 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING AN AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX REVENUE WITH RING PROPERTIES RELATING TO IMPROVEMENTS TO BE PERFORMED ON A PROPERTY LOCATED AT 11501 DUBLIN BOULEVARD WHEREAS, the current worldwide economic slowdown has negatively impacted the City of Dublin's revenues; and WHEREAS, for decades, state and local governments have used economic development incentives to attract or retain jobs and/or improve the local tax base; and WHEREAS, on January 6, 2009, the City Council of the City of Dublin adopted Resolution No. 9-09, establishing a Sales Tax Reimbursement Program ("the Program") intended to attract new businesses to the City; and WHEREAS, the Program established certain conditions under which the City may agree to enter into an agreement to reimburse property owners and businesses for costs they incur in making certain internal and external building improvements, as well as site improvements provided that certain conditions are met; and WHEREAS, Ring Properties ("the Owner") owns certain real property located at 11501 Dublin Boulevard ("the Property"), located in the City; and WHEREAS, the Owner has entered into an 10-year lease agreement with Graybar Electric Company, Inc. ("the Tenant"), and the Owner has furnished the City with documentation establishing that the Tenant will generate more than one hundred thousand dollars ($100,000) of sales tax revenue for the City each year; and WHEREAS, the Owner wishes to perform certain interior, exterior and site improvements, and to avail itself of the benefits of the Program by entering into an agreement with the City to receive reimbursement from the City to be paid out of sales tax revenue generated by the Tenant; and WHEREAS, the City Council finds that it is in the public interest to enter into this agreement because the City and its residents will benefit from increased revenue received from both sales tax revenue that it may not otherwise receive, and from the increase in the property taxes owed by the Owner due to the increased value of the property from the improvements; and WHEREAS, the City Council finds that it is in the public interest to enter into this agreement because the City and its residents will benefit from the aesthetic improvements to the neighborhood that will occur due to the exterior improvements to be made to the structure; and ATTACHMENT 2 ~-~ti ~~ WHEREAS, the City Council further finds that the City and its residents may also benefit from the creation of new jobs in the City that will occur when the Tenant establishes its business here. NOW, THEREFORE, BE IT RESOLVED that the City Council of Dublin approves the Sales Tax Reimbursement Agreement (attached as Exhibit A and titled "Agreement for Reimbursement of Sales and Use Tax Revenue between the City of Dublin and Ring Properties." BE IT FURTHER RESOLVED that the City Manager is authorized to execute the agreement substantially in the form attached hereto and to undertake such further action as may be necessary and desirable to carry out the intent of this resolution. PASSED, APPROVED AND ADOPTED this _ day of , 2009. AYES: NOES: ABSENT: ABSTAIN: ATTEST: City Clerk Mayor 2 EXHIBIT A TO ATTACHMENT 2 s~~~ AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX REVENUE BETWEEN THE CITY OF DUBLIN AND RING PROPERTIES THIS AGREEMENT is made and entered into this th day of , 2009, by and between the City of Dublin ("City"), a municipal corporation, and the Ring Family Revocable Trust and the Davies Family Revocable Trust, both revocable trusts doing business as Ring Properties. The Ring Family Revocable Trust and the Davies Family Revocable Trust dba Ring Properties, are hereafter referred to as "Owner." RECITALS WHEREAS, the City Council of the City of Dublin adopted Resolution No. 9-09 on January 6, 2009 establishing a Sales Tax Reimbursement Program ("Program") for a period of two years; and WHEREAS, the Program authorizes the City of Dublin to enter into agreements with property owners and businesses, in certain circumstances, wherein the City agrees to reimburse the owner or business for the actual costs of certain pre-approved improvements to business properties. The reimbursement is made in annual payments over five years or until the owner or business has recouped its actual expenses for the improvements, whichever comes first. The annual payment is capped at fifty percent (50%) of the sales and use tax revenue (hereafter "sales tax") generated by the business in the preceding year; and WHEREAS, provided certain circumstances are met, the Program allows property owners to recover, over time, a portion of the costs of interior, exterior and site improvements made to their property through a partial reimbursement from the City of sales tax generated from the property; and WHEREAS, Owner owns certain real property located at 11501 Dublin Boulevard (°the Property"), located in the City; and WHEREAS, Owner has entered into a ten (10) year lease agreement for office space at the Property, with Graybar Electric Company (°Tenant"), which does not currently rent office space elsewhere in the City; and WHEREAS, the lease agreement is for a space that has a total area of seventy-five thousand (75,000) square feet or less, and Owner has furnished the City with documentation establishing that Tenant is expected to have at least ten million dollars ($10,000,000) in annual retail sales transactions attributable to operations conducted at the Property, which would result in at least one hundred thousand dollars ($100,000) of sales tax for the City each year; and WHEREAS, Owner and Tenant have agreed that Tenant will conduct certain tenant improvements to the property and Owner will pay Tenant up to three hundred thousand dollars ($300,000) for said tenant improvements; and WHEREAS, Owner will perform additional interior improvements, exterior improvements and site improvements to the Property, and wishes to utilize the Program to receive reimbursement from the City for the costs it incurs in improving the Property. AGREEMENT NOW, THEREFORE, for and inconsideration of the mutual advantages to be derived therefrom, and in consideration of the mutual covenants herein contained, it is agreed by and between the Parties hereto as follows: EXHIBIT A TO ATTACHMENT 2 c~~ ~~ 1. DEFINITIONS 1.1 "Exterior Improvements" means all improvements made to the exterior of the physical structure of the office building identified in Exhibit A of this Agreement. 1.2 "Improvements" means all Tenant Improvements, Exterior Improvements, Interior Improvements, Site Improvements and Public Right-of-Way Improvements identified in Exhibit A and Exhibit B of this Agreement. 1.3 "Interior Improvements" means all improvements made to the interior office space to be occupied by the Tenant and identified in Exhibit A of this Agreement. 1.4 "Reporting Year" means any twelve month period for which Owner provides an accounting of Tenant's sales tax payments, which payments are subject to possible reimbursement. 1.5 "Right-of-Way Improvements" means all improvements made to the City's public right-of- way identified in Exhibit A of this Agreement. 1.6 "Site Improvements" means all improvements made to the Property that are not Exterior Improvements, Interior Improvements or Right-of-Way Improvements identified in Exhibit A of this Agreement. 1.7 "Tenant Improvements" means all physical improvements made to the interior office space to be occupied by Tenant that are contracted and paid for by Tenant and identified in Exhibit B of this Agreement. 2. OWNER'S DUTIES UNDER THIS AGREEMENT 2.1 Owner wishes to perform certain Exterior Improvements, Interior Improvements, Right-of- Way Improvements and Site Improvements substantially as described in Exhibit A of this Agreement . Furthermore, Tenant intends to perform certain Tenant Improvements substantially as described in Exhibit B of this Agreement for which Owner will provide partial reimbursement pursuant to the provisions of the lease agreement between Owner and Tenant. 2.2 Prior to commencement of construction of the Improvements or any portion thereof, Owner shall provide City with a copy of its agreement with Tenant requiring Owner to pay Tenant three hundred thousand dollars ($300,000) to cover a portion of the cost of the Tenant Improvements. 2.3 Owner has provided City with a description of all proposed improvements and a cost estimate for the proposed improvements hereto as Exhibit A. The total cost estimate for these improvements is three hundred thirty-two thousand five hundred dollars ($332,500). This amount, plus three hundred thousand dollars ($300,000) which Owner is required to pay Tenant as described in Section 2.2 of this Agreement constitute the Maximum Compensation Amount of six hundred thirty-two thousand five hundred dollars ($632,500). Absent an amendment to this Agreement and subject to approval by the City Council of the EXHIBIT A TO ATTACHMENT 2 ~?~ ~ ~ City of Dublin, in no event shall City pay Owner more than the Maximum Compensation Amount. Prior to commencement of construction of the Improvements or any portion thereof, Owner shall submit to City all plans and specifications for the Improvements for City review and approval, including the plans, specifications and cost estimates for the Tenant Improvements identified in Exhibit B of this Agreement. Nothing in this Agreement shall affect the need for Owner and Tenant to obtain any approvals from the City for the Improvements as required by any City rules, regulations, ordinances or resolutions. 2.4 Following City approval of the plans, specifications and cost estimates pursuant to Section 3.2, and in the event that Owner desires to modify the specifications for any of the Improvements or if change orders are required, Owner shall submit said modifications and change orders to City for approval. Failure to do so shall relieve the City of any obligation to pay for any Improvements not constructed as approved, pursuant to Section 3.1. 2.5 Owner may, in its discretion, arrange to have all of the Improvements constructed atone time, or to have the Improvements constructed in the following two phases: 1) all Tenant Improvements, Interior Improvements and Exterior Improvements ("Phase One"), 2) all Site Improvements and Right-of-Way Improvements ("Phase 2"). 2.6 In the event that Owner does not elect to construct the Improvements in phases pursuant to Section 2.5, Owner shall provide the City with all invoices, receipts and evidence of payment for the Exterior Improvements, Interior Improvements, Right-of-Way Improvements and Site Improvements by the end of the first Reporting Year in which Tenant pays sales taxes based on its operations in Dublin. Said bills and evidence of payment shall also include a cover sheet summarizing the information contained therein, including the original approved estimate amount and the amount paid to each vendor. In the event that Owner elects to construct the Improvements in phases pursuant to Section 2.5 of this Agreement the cover sheet shall clearly identify whether any submitted invoice, receipt and payment corresponds to Phase One or to Phase Two. Owner must submit said bills, receipts and evidence of payment for Phase One by the end of the first Reporting Year in which Tenant pays sales taxes based on its operations in Dublin. Once Owner submits the first Phase Two invoices, receipts and evidence of payment, this will trigger the five year repayment window for Phase Two. 2.7 Owner shall provide the City with evidence of all payments made by Owner to Tenant pursuant to the lease agreement between those parties described in Section 2.2 of this Agreement, within thirty (60) days of making said payments. 2.8 Once Tenant begins paying sales taxes on its operations within the City, Owner shall provide City with an annual report by a duly authorized representative of Tenant, showing the amount of sales tax Tenant paid for transactions occurring in the City in the preceding Reporting Year. The report shall include a breakdown of the amount of sales tax payments made in each quarter of the Reporting Year. EXHIBIT A TO ATTACHME ~2 I The first Reporting Year shall begin with the first full calendar quarter in which Tenant pays sales taxes on its operations in City. For example, if Tenant begins operations in February of any given year, Owner shall send to City an accounting of the amount of sales tax Tenant paid from April of that year through the following March, broken down by calendar quarter. Owner shall provide City with this report within ninety (90) days of the conclusion of the fourth calendar quarter of each reporting year. a. In the event that Owner does not elect to construct the Improvements in phases pursuant to Section 2.5, Owner shall provide City with a total of five (5) annual reports, beginning with the first full calendar quarter in which Tenant pays sales taxes on its operations in City, of the sales taxes paid by Tenant, covering a total of five consecutive (5) Reporting Years. b. In the event Owner elects to construct the Improvements in phases pursuant to Section 2.5 of this Agreement, Owner shall follow the procedure described above, providing City with a total of five (5) annual reports for each individual phase. The first Reporting Year for Phase One shall begin with the first full calendar quarter in which Tenant pays sales taxes on its operations in City. The first Reporting Year for Phase Two shall begin with the first full calendar quarter after Owner submits any bills or evidence of payment for any Phase Two Improvements, pursuant to Section 2.6 of this Agreement. Once Owner submits any such bills or evidence of payment for Phase Two, Owner shall provide City with a total of five (5) annual reports of the sales taxes paid by Tenant covering a total of five (5) consecutive Reporting Years for Phase Two. 2.9 The actual cost of the Improvements for which evidence of payment has been submitted to City pursuant to Section 2.6 of this Agreement, plus the total amount of payments made by Owner to Tenant and reported to City pursuant to Section 2.7 of this Agreement shall constitute the Eligible Compensation Amount. Each time Owner submits evidence of payment pursuant to Section 2.6, or reports a payment to Tenant pursuant to Section 2.7 of this Agreement, the Eligible Compensation Amount shall be adjusted to reflect the amounts paid by Owner. In the event Owner elects to construct the Improvements in phases pursuant to Section 2.5 of this Agreement, there shall be two separate Eligible Compensation Amounts, one for the first phase, and one for the second phase. All payments to Tenant reported pursuant to Section 2.7 shall be added to the Eligible Compensation Amount for the first phase. 2.10 In the event that Owner performs improvements to interior spaces of the Property in addition to the Interior Improvements, as defined in Section 1.3 of this Agreement, Owner shall cause all such improvements to be billed and paid for separately from the Improvements described in Exhibit A. 2.11 A representative of the City shall have the right, at the City's sole.discretion, to inspect all Improvement work performed to ensure that said work was performed substantially as approved by the City pursuant to Section 3.1 of this Agreement. This right of inspection shall be in addition to any inspection performed by City staff as required or permitted by any other City rules, regulations, ordinances or resolutions. EXHIBIT A TO ATTACHMENT 2 ~ ~ - ~{~- 2.12 In the event that Tenant, during the term of this Agreement, opens an additional business operation in the City that will pay sales. taxes, Owner shall ensure that the report of Tenant's annual sales tax it submits to City, pursuant to Section 2.6 of this Agreement includes only that portion of the sales tax attributable to business conducted by Tenant at the Property. 2.13 In the event that City determines, pursuant to Section 3.10 of this Agreement, that it overpaid Owner due to a miscalculation or misallocation of sales tax payments, and if City is not obligated to make any additional payments to Owner pursuant to this Agreement, or the amount of any additional payments owed by City is insufficient to compensate City for its prior overpayment, Owner shall pay to City the amount City overpaid within sixty (60) days of notification by City of the overpayment. 2.14 Owner agrees that the Right-of-Way Improvements constitute "public works" as that term is defined in Section 1720 of the California Labor Code. Owner shall ensure that all work on the Right-of-Way Improvements is performed in compliance with all prevailing wage requirements contained in Section 1720 et seq. of the California Labor Code. 2.15 Owner acknowledges that it has had the opportunity to consult with an attorney regarding the terms of this Agreement. 3. CITY'S DUTIES UNDER THIS AGREEMENT 3.1 Upon receipt of the plans and specifications for the Improvements pursuant to Section 2.3 of this Agreement, City shall review said materials to determine the extent to which they represent work that is consistent with the intent of the Program. City shall inform Owner in writing either that the Improvements have been approved, or that they have been approved with exceptions, which exceptions shall also be in writing. 3.2 Within thirty (30) days of receipt of receipt of evidence of payment for the Improvements, any individual phase of the Improvements pursuant to Section 2.6 of this Agreement, or of payments made to Tenant pursuant to Section 2.7 of this Agreement, City shall provide Owner with an updated statement of the Eligible Compensation Amount. Where Owner elects to construct the Improvements in phases pursuant to Section 2.5 of this Agreement, City shall provide Owner with an updated statement of the Eligible Compensation Amount for the relevant phase. 3.3 City shall verify the accuracy of Owner's report of sales tax delivered to City pursuant to Section 2.8 of this Agreement. City shall, within one hundred twenty (120) days after the end of the last calendar quarter covered by the report, and subject to the provisions of Sections 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 of this Agreement, pay to Owner an amount equal to fifty percent (50%) of the sales tax paid by Tenant. In the event that the City is unable to verify the accuracy of Owner's report of sales tax delivered to City pursuant to Section 2.8 of this Agreement, City shall so inform Owner. Owner shall have sixty (60) days from such notification by City to deliver a revised report of sales tax in the form described in Section 2.8. If City is able to verify the accuracy of any such new report, City shall, subject to the provisions of Sections 3.4, 3.5, 3.6, 3.7, 3.8 and EXHIBIT A TO ATTACHMENT 2 ~~ ~i ~- 3.9 of this Agreement, pay to Owner an amount equal to fifty percent (50%) of the sales tax paid by Tenant. If Owner does not submit a revised report within sixty (60) days of notification, or if City is unable to verify the accuracy of the revised report, City shall make no payment to Owner for that Reporting Year until the matter is resolved to the satisfaction of the City. 3.4 Should Owner fail to timely submit to City the information as required in Section 2.6 of this Agreement, City shall be under no obligation to make any payment to Owner for that year. 3.5 In no event shall City make any payment to Owner for any year in which the total sales tax paid by Tenant is less than one hundred thousand dollars ($100,000). 3.6 At no time shall the cumulative amount of City's payments be more than the Eligible Compensation Amount then in effect. 3.7 If Owner does not elect to construct the Improvements in phases pursuant to Section 2.5, in no event shall City be obligated to pay Owner based on sales tax generated more than five (5) years after the first quarter covered by the report of sales tax submitted to City pursuant to Section 2.8 of this Agreement. In the event that Owner has elected to construct the Improvements in phases pursuant to Section 2.5 of this Agreement, in no event shall City be obligated to pay Owner for any individual phase based on sales tax generated more than five (5) years after the first quarter covered by the report of sales tax for that same phase submitted to City pursuant to Section 2.8 of this Agreement. 3.8 In the event that the actual cost of the Improvements, or any phase thereof, is less than the estimates approved by City pursuant to Section 3.1 of this Agreement, City shall be responsible only for cumulative payments equal to the actual amount of the Improvements. 3.9 In the event that Tenant terminates its lease agreement or otherwise vacates the Property before submitting five (5) annual reports of sales tax payments, City's obligation to pay Owner shall be based only on the amount of sales tax generated by Tenant while occupying the Property. 3.10 In the event that City learns that Tenant's sales tax payments were incorrectly calculated or allocated to the City, and if the result of the incorrect calculation or allocation is that City paid Owner more or less than it would have been required to pay pursuant to Section 3.3 of this Agreement, City shall determine the amount of overpayment or underpayment. If the City is obligated to make any subsequent annual payment to Owner pursuant to this Agreement, City shall adjust the subsequent payment to reflect any overpayment or underpayment it may have made for the period in question. If City determines that it underpaid Owner, but is not obligated to make any additional payments to Owner pursuant to this Agreement, City shall pay owner the amount it underpaid, provided that the total payments to Owner do not then. exceed the Maximum EXHIBIT A TO ATTACHMENT 2 ~~~~- Compensation Amount. This payment shall be made within sixty (60) of City's discovery of the amount of the underpayment. If City determines that it overpaid Owner, but is either not obligated to make any additional payments to Owner pursuant to this Agreement, or the amount of any additional payments is insufficient to compensate City for its prior overpayment, Owner shall pay City the amount City overpaid incompliance with Section 2.13 of this Agreement. 4. Indemnification Owner shall defend City, its officers, employees and officials, against any claims or actions (including declaratory or injunctive relief) concerning Owner's construction of the Improvements, including the Right-of-Way Improvements, and shall indemnify and hold City harmless from any damages, charges, fees or penalties that may be awarded or imposed against City and/or Owner in connection with, or on account of, Owner's construction of the Improvements, including the Right- of-Way Improvements, and/or City's failure to enforce or comply with any applicable laws. 5. Amendments to Agreement No part of this Agreement shall be altered or amended without written agreement of the signatory Parties. Any amendment to the Maximum Reimbursement Amount shall require prior approval by the City Council of the City of Dublin. 6. Assignment The rights and obligations of the Parties under this agreement are not assignable and shall not be delegated without the prior written approval of the other Party. 7. Exhibits. The following Exhibit is attached hereto and incorporated as if fully set forth herein: Exhibit A: Description of Improvements. Exhibit B: Description of Tenant Improvements IN WITNESS WHEREOF, the Parties execute this agreement hereto on the day and the year first written above. APPROVED AS TO FORM AND CONTENT: By: John D. Bakker, City Attorney, City of Dublin ADOPTED BY: EXHIBIT A TO ATTACHMENT 2 I~~ CITY OF Dublin, a Municipal Corporation Date: By: Joni Pattillo, City Manager The Ring Family Revocable Trust as to an undivided two-thirds (2/3) interest in the Property and the Davies Family Revocable Trust as to an undivided one-third (1/3) interest in the Property Date: Date: The Ring Family Revocable Trust By: Kevin Ring, trustee under trust agreement dated March 23, 1993 The Davies Family Revocable Trust By: Caroline Davies, trustee under trust agreement dated February 24,1992 1192643.13 i3~-~- Exhibit A Tenant Improvements MAXIMUM COMPENSATION AMOUNT: $632,500 o Tenant Improvement Allowance for work conducted by Graybar (see Exhibit B for description) o Cost: $300,000 Interior Improvements: o Remodel 1st floor (Graybar's) restrooms. Includes new counter tops, sinks, faucets, low flow toilets, partitions, tile, and paint o Estimated Cost: $25,500 Exterior Improvements: o Paint on north and east sides (visible from Dublin Blvd) o Estimated Cost: $12,000 Site and Right-of--Way Improvements: o Improvements as necessary to connect the existing parking area to the new access that will be constructed off Dublin Blvd. o Construct additional parking for Graybar on the excess right-of--way area. o Improvements will include grading, paving (new and repair), concrete curbing and stairs and/or sidewalks, parking lot sealing and striping, signage numbering, and landscaping. o Costs will include fees for civil engineers, a landscape architect, city plan check and permits, and as well as factoring in labor costs under prevailing wage for the right-of--way improvements. o Estimated costs: plans are completed) $295,000 (plans cannot be prepared until the Dublin Blvd. expansion txH~1~BIT/~- C D ~(~~..~d~c T ~~~~- Exhibit B TENANT IMPROVEMENTS - GRAYBAR ELECTRIC, INC. DESCRIPTION Tenant Improvement Summary o Demolition of existing executive suite space o Installation of new carpets o Upgrades to disability access o Addition of a conference room o Remodel of remaining offices o New lighting/rewiring of electrical system o New mechanical duct work o New heat pumps o Painting of walls Tenant Improvement Allowance for work conducted by Graybar -Cost: $300,000 (valuation of the improvements -approx. $700,000) n L~~R~I t-.flJ i